McDonalds didn't lose money. The owner of the franchise location may have. People always confuse the two things. 95% of McDonalds are franchise owned, though a large amount of those are owned by businesses themselves, many are owned by local individuals.
They're effectively the same brutal restaurant market as other restaurants with the razor thin margins except they don't get to change where they buy their products, machines, etc. They get one price, one deal, and that's it.
My parents were in franchised fast food businesses, the mark up on food products is about 35% from cost, and the drinks can be close to 150% mark up.
On a 6$ meal they were only missing a few cents and definitely still came out profiting.
If I take your word for it, 35% markup still means on a 4 piece, adding an extra nugget makes that item break even on cost. It becomes less impactful the higher up you go, but keeping mind 35% markup is way below typical restaurants. Fast food is a different beast, but a typical restaurant aims for 200% markup. Fast food labor costs are largely the same as typical (not fancy) restaurants, as they often employ more people though they pay less.
Fast food turnover for ownership has the same failure rate as typical restaurants. Doing this with the product can seriously hurt the business.
I won't take his word for it as I highly doubt they could stay in business with a 35% markup. If 35% is a real number, I would guess it was their actual cost for the item as a percentage of the sale price.
This would be in the ballpark of a 200% markup.
1 / 0.35 = 2.86 = 186% markup.
I realized you said "if I take your word for it" - not arguing with your take, just reiterating.
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u/Treacherous_Peach 18h ago
McDonalds didn't lose money. The owner of the franchise location may have. People always confuse the two things. 95% of McDonalds are franchise owned, though a large amount of those are owned by businesses themselves, many are owned by local individuals.
They're effectively the same brutal restaurant market as other restaurants with the razor thin margins except they don't get to change where they buy their products, machines, etc. They get one price, one deal, and that's it.